As with any pioneering expeditions, those who embark on journeys to find or create something completely new, will either shine in glory or find themselves in no man’s land. The rapid rise and recent fall in digital asset investments has found many trailblazers and regulators in unfamiliar territory.
It was a matter of time before governments across the globe had to scratch their heads on how to regulate new systems, take a slice of the pie and play cat and mouse with tricksters.
Recently, there have been significant global and local insolvency cases in this space. In this article, we have picked out some of the issues that may arise in those situations.
Quo vadis, crypto?
The first question behind a collapse is always – why? Whether we like it or not, but history keeps repeating itself in a different shape or form. Poor management practices, ranging from poor internal controls to fraud, is a tell-tale sign of a disaster in the making. Investors, retail and institutional, have found themselves on the receiving end due to liquidity pressures experienced by exchanges and lenders.
Challenges with digital assets
Recent collapses of exchanges and values of digital assets highlight some of the following challenges for stakeholders:
(a) Legal characteristics of crypto assets which may vary across jurisdictions.
(b) Jurisdictional issues for asset recovery and enforcement.
(c) Ease of movement of digital assets increases risk of abscondment.
(d) Hurdles with identification of transacting and controlling parties.
(e) Variety of crypto assets keeps expanding.
As this new frontier keeps evolving, those in the ecosystem will need to sharpen their skill set to keep up with the changes. Proper care is required to mitigate risks in the decentralised markets.
How can Charles & Co. help you?
Our Team with more than 50 years combined experience is well placed to help businesses in a range of challenging and distressed situations. We encourage anyone experiencing financial and/or operational distress to contact us to discuss your options.